TPguidelines

The fact pattern is the same as in example (B), except that part of Company A’s head office is effectively relocated to Country Z: 30 of the 125 head office employees are dismissed, another 30 are transferred to the new Company Z in Country Z, and 15 new employees are directly hired by Company Z in Country Z to take over functions performed by the dismissed employees. The employees of Company Z have the skills and competences to do the strategic development of the brand name and to execute the worldwide marketing strategy. Furthermore, it is assumed in this example that Company Z has the financial capacity to assume the risks associated with the strategic development of the brand names. Company Z, which is now the legal owner of the brand names actively carries on the development, maintenance and execution of a worldwide marketing strategy. The employees of Company Z have the authority to and actually perform control functions in relation to the risks associated with the strategic development of the brand names. The services provided by the remainder of Company A’s head office in Country A are central services (e.g. human resources management, legal and tax) as well as support marketing functions that are closely monitored by the personnel of Company Z. The main reason for the group entering into this restructuring is to benefit from a favourable tax regime in Country Z compared to the tax regime in Country A.